Opinion
No. 1:99CV333
October 31, 2002
MEMORANDUM OPINION RE: MOTION TO DISMISS OR TRANSFER [Doc. 4]
North Carolina plaintiff, Z. Bavelloni U.S.A.'s (ZBU) complaint seeking money damages for non-payment of goods and requesting a declaratory judgment that it had not breached a contract for the sale and servicing of a stone edging machine was removed to this Court. The defendant, The Marble Showroom (TMS) — a Tennessee corporation, responded with a motion to dismiss pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure asserting that it had no presence in the State of North Carolina and insufficient contacts to support a finding of personal jurisdiction. For the reasons which follow, it is determined that ZBU has met the burden under Rule 12(b)(2) of showing sufficient contacts and that the motion to dismiss should be denied. It is also determined that, upon balancing the relative convenience to the parties and finding that the respective hardships of prosecuting and defending in an adjoining state appear evenly balanced, a transfer to the Western District of Tennessee will be denied.
When a 12(b)(2) motion is considered on the basis of motion papers, including affidavits, legal memoranda, and the allegations of the complaint, the party seeking to establish jurisdiction — here, ZBU — need make only a prima facie showing of personal jurisdiction. In deciding whether a prima facie showing has been made, all relevant pleading allegations must be construed in the light most favorable to ZBU, meaning that statements are assumed to be true and are interpreted in the light most favorable to it. See Combs v. Bakker, 886 F.2d 673, 676 (4th Cir. 1989)
The question of personal jurisdiction is answered through a two-step analysis. The court must determine whether the state's statutory authority confers jurisdiction, and if so, whether an exercise of jurisdiction complies with the federal constitutional standards of due process. Dowless v. Warren-Rupp Houdailles, Inc., 800 F.2d 1305, 1306; (4th Cir. 1986).
North Carolina General Statute 1-75.4(5) provides that jurisdiction exists in any action which: "a. Arises out of a promise, made anywhere to the plaintiff . . . by the defendant . . . to pay for services to be performed in this State by the plaintiff; or b. Arises out of services actually performed . . . for the defendant by the plaintiff within this State if such performance within this State was authorized . . . by the defendant."
Since the North Carolina Supreme Court has interpreted the state's long arm statute as conferring upon the state's courts "the full jurisdictional powers permissible under federal due process" Dillon v. Numismatic Funding Corp., 291 N.C. 674, 676; 231 S.E.2d 629, 630 (1977), the question is whether requiring TMS to defend an action in North Carolina comports with the requirements of due process.
In an affidavit, Jack Van Meerbeeck, Vice-President of ZBU, asserts that in 1997, ZBU was in contact with TMS discussing the sale of a Miura stone edging machine. Joe Schneider, a Sales Engineer visited with TMS representatives in Memphis, Tennessee and Archie Miller, President of TMS, came to North Carolina to see a Miura machine in operation and discuss the purchase of one with Van Meerbeeck and Schneider. Other discussions pertaining to the sale proceeded by phone and fax, some originating in North Carolina, some from Tennessee. When TMS actually ordered a machine, the check representing a 90% down payment was sent to and negotiated in North Carolina. Provisions of the contract called for ZBU to provide technical advise after installation and TMS called North Carolina on a number of occasions for assistance. On at least twenty-three occasions, TMS ordered parts or tooling for the Miura from ZBU in Greensboro. Payment was sent to North Carolina and checks were negotiated there. Parts and tooling were forwarded from North Carolina to Memphis. The contract called for disputes to be resolved according to North Carolina law.
Two types of personal jurisdiction are recognized: general and specific. The exercise of general jurisdiction is appropriate when the defendant engages in continuous and systematic contacts with the forum state. Other than its activity in this particular instance, there is no allegation that TMC engages in systematic and continuous contacts with persons or entities in North Carolina.
Specific jurisdiction, however, may arise out of a defendant's activities in the forum state. The Supreme Court has observed:
If the question is whether an individual's contract with an out-of-state party alone can automatically establish sufficient minimum contacts in the other party's home forum, we believe the answer clearly is that it cannot. The Court long ago rejected the notion that personal jurisdiction might turn on "mechanical" tests, International Shoe Co. v. Washington, supra, 326 U.S., at 319, 66 S.Ct., at 159, or on "conceptualistic . . . theories of the place of contracting or of performance," Hoopeston Canning Co. v. Cullen, 479 318 U.S. at 316, 63 S.Ct., at 604. Instead, we have emphasized the need for a "highly realistic" approach that recognizes that a "contract" is "ordinarily but an intermediate step serving to tie up prior business negotiations with future consequences which themselves are the real object of the business transaction." Id., at 316-317, 63 S.Ct., at 604-605. It is these factors — prior negotiations and contemplated future consequences, along with the terms of the contract and the parties' actual course of dealing — that must be evaluated in determining whether the defendant purposefully established minimum contacts within the forum.Burger King Corporation v. Rudzewicz, 471 U.S. 462, 478-9; 105 S.Ct. 2174, 2185 (1985).
In this case, the relationship between the parties lasted more than two years. Mr. Miller came to North Carolina, Mr. Schneider went to Tennessee. The majority of the payment for the machine was sent to North Carolina. There were numerous telephone calls between the parties during negotiations. Afterwards, there were a number of calls to ZBU in North Carolina by TMS representatives initiating service conversations. Parts and tooling were ordered from North Carolina on at least twenty-three occasions, shipped to Tennessee and payments sent to North Carolina. The parties agreed that North Carolina law would govern disputes arising out of the contract. These contacts are sufficient to support a prima facia showing of contacts that were neither random nor attenuated. See English Smith v. Metzger, 901 F.2d 36 (4th Cir. 1990).
In the alternative, TMC requests that, pursuant to 28 U.S.C. § 1404 (a), the court transfer this action to the United States District Court for the Western District of Tennessee. 28 U.S.C. § 1404 (a) provides that, in the interest of justice and for the convenience of the parties, a district court may transfer any civil action to any other district or division where it might have been brought. In considering a § 1404(a) motion to transfer, the plaintiff's choice of forum is given great weight and should rarely be disturbed unless, upon weighing the convenience and hardships to each party, the balance is strongly in favor of the defendant. Collins v. Straight, Inc., 748 F.2d 916, 921 (4th Cir. 1984). While TMS does not identify the number of witnesses from Tennessee it wishes to call, ZBU identifies seven in the Greensboro area it would call. It is not likely that a jury would need to see the actual machine in operation since a videotape could graphically provide whatever information might be needed. There has been no showing that the venue balance tips decidedly in favor of TMS and the motion to transfer will be denied.
For the reasons stated, the motion [Doc. 4] to dismiss for lack of personal jurisdiction or, in the alternative, to transfer pursuant to 28 U.S.C. § 1404 (a) will be DENIED.